GOP-led House passes landmark Brady tax bill

'You pass this bill, you grow the economy,' Speaker Ryan says

In this Oct. 26, 2017, photo, House Ways and Means Committee Chairman Kevin Brady, R-Texas, whose panel is charged with writing tax law, talks to reporters on Capitol Hill in Washington. President Donald Trump and Republican leaders are promoting their tax-cutting plan as needed relief for the stressed American middle class and a catalyst for job creation. Democrats say they're the ones looking out for the middle class, by fighting against proposed tax cuts that would benefit big corporations and the wealthy but hurt the average American. But what exactly defines this middle class, championed and courted for its votes by both sides? Lawmakers and experts have differing views on the numbers. (AP Photo/J. Scott Applewhite) less

In this Oct. 26, 2017, photo, House Ways and Means Committee Chairman Kevin Brady, R-Texas, whose panel is charged with writing tax law, talks to reporters on Capitol Hill in Washington. President Donald Trump ... more

Photo: J. Scott Applewhite, STF

Photo: J. Scott Applewhite, STF

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In this Oct. 26, 2017, photo, House Ways and Means Committee Chairman Kevin Brady, R-Texas, whose panel is charged with writing tax law, talks to reporters on Capitol Hill in Washington. President Donald Trump and Republican leaders are promoting their tax-cutting plan as needed relief for the stressed American middle class and a catalyst for job creation. Democrats say they're the ones looking out for the middle class, by fighting against proposed tax cuts that would benefit big corporations and the wealthy but hurt the average American. But what exactly defines this middle class, championed and courted for its votes by both sides? Lawmakers and experts have differing views on the numbers. (AP Photo/J. Scott Applewhite) less

In this Oct. 26, 2017, photo, House Ways and Means Committee Chairman Kevin Brady, R-Texas, whose panel is charged with writing tax law, talks to reporters on Capitol Hill in Washington. President Donald Trump ... more

Photo: J. Scott Applewhite, STF

GOP-led House passes landmark Brady tax bill

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WASHINGTON – In a big victory for Houston-area Republican Kevin Brady, the House passed a sweeping tax overhaul Thursday on a narrow party-line vote, setting up a showdown in the Senate that will test the unity of the GOP's slim majority.

The 227-to-205 vote brought President Donald Trump a step closer to a long-held GOP campaign promise: Dramatically cutting the rates for corporations, individuals and families, while taking away many deductions and credits.

Taxes, on average, would go down, Republicans said. But Democrats and some independent analysts predicted uneven benefits from the GOP legislation, which they said would further enrich the wealthy, deepen deficits, and increase the overall tax burden on as many as 36 million middle-class Americans.

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Significant changes are expected in the Senate, possibly even including the repeal of the individual mandate under President Barack Obama's Affordable Care Act. That provision was added to the Senate version on Tuesday, cheering hard-right conservatives still smarting from their defeat on repealing Obamacare. But it also set up a battle that could narrow the Trump administration's prospects for a much-needed legislative victory in Congress.

Brady and House Speaker Paul Ryan, who was cheered by Republicans in the House floor, promised across-the-board tax relief for middle-class Americans, with an average savings of $1,182 for a typical family of four.

"You pass this bill, you grow the economy," Ryan said in a final appeal before the vote.

Despite a closed-door, GOP pep rally with Trump at the Capitol, 13 Republican lawmakers voted against the House bill – none from Texas. Facing unified Democratic opposition, Republicans could afford to lose only 22 votes from their side.

But even with the defections, the vote represented a career capstone for Brady, a Republican from The Woodlands and one of the chief tax-writers in Congress as chairman of the Ways and Means Committee.

For Brady, the Tax Cuts and Jobs Act was the culmination of several years of internal GOP negotiations balancing lower tax rates, fewer credits and deductions, and large corporate tax breaks. The result, he vowed, would be simpler tax accounting, bigger paychecks and more plentiful work from strong economic growth and business dynamism.

He also called it the most significant rewrite of the U.S. tax code since the presidency of GOP icon Ronald Reagan, who signed a major tax reform bill in 1986 with bipartisan support.

"With this historic bill we'll provide real simplicity for every taxpayer, and we'll deliver real fairness to every hard-working American," Brady said in the final House debate. "Washington special interests who are now being propped up by absurd carve-outs and loopholes, get ready to stand up on your own."

Brady acknowledged, however, that the House vote is only Step One.

"There are still some areas where we will and can make improvements," he promised lawmakers wary of jettisoning popular middle-class tax deductions for mortgage interest and state and local taxes.

Democrats and some mainstream economists cast doubt on the promise of a tax-cut-fueled economic boom, while Republicans from high-tax states like New York, New Jersey and California balked at the prospect of facing constituents with bigger tax bills.

Critics also pointed to estimates that GOP tax cuts would shrink federal revenues by some $1.5 trillion over the next decade, forcing cuts in major social programs like Medicaid and Medicare. Those deficit concerns appear to have sealed the opposition of centrist Democrats that Brady and others had courted.

"It is easy to vote for a tax cut," said Democratic Whip Steny Hoyer of Maryland. "It is harder to pay for what we buy."

Brady and other GOP leaders argue that the official estimates of lost revenue don't take into account the economic stimulus of the tax cuts, which some conservative economists believe would pay for themselves. For Republicans, one of the chief selling points of the tax legislation would be the lowering of the top corporate rate from 35 percent to 20 percent, which is intended to spur domestic investment.

But Republicans still face significant obstacles in the Senate, where at least two members of their caucus – representing the difference in their 52-48 majority – have expressed doubts in recent days. One, Wisconsin Republican Ron Johnson, said he opposed both versions of the tax bill because they favor large corporations over smaller so-called pass-through businesses; Another, Susan Collins of Maine, one of three Republicans who voted against a GOP effort to repeal Obamacare, said she has concerns about taking away the law's individual mandate.

The politics of the House bill also could also come home to roost in Houston, where at least three Democrats vying to challenge Republican incumbent John Culberson in 2018 – attorney Lizzie Fletcher, non-profit executive Alex Triantaphyllis, and physician Jason Westin – released statements attacking his vote for the bill.

Culberson's is one of three Republican-held congressional districts in Texas that Hillary Clinton won in 2016.

Culberson called the bill "an important advance on delivering real, meaningful tax relief for Americans at every income level across the nation." In his 7th District, he said, the typical family of four could expect a tax break of $2,598 next year.

But a number of independent analyses have estimated that the House bill, though it lowers tax rates and doubles the standard deduction for families and individuals, could still end up costing taxpayers more in lost deductions, especially those in wealthy areas with high property values like those in the western part of Harris County.

State, local taxes

The House bill would repeal most state and local taxes except for real estate taxes, which would be capped at $10,000. It also would limit the mortgage interest deduction to $500,000 of a loan. The Senate version would repeal all state and local tax deductions, though it would maintain the current mortgage write-off.

Some Democrats also lamented the loss of working-class write-offs for certain types of educational, work, and medical expenses.

"This is not the American Dream tax plan. This is the American nightmare, a tax scam of the worst proportions," said Houston Democrat Sheila Jackson Lee, warning that the lost deductions could be a setback for constituents trying to rebuild their lives after Hurricane Harvey.

Brady, in a rejoinder on the House floor, said that the average tax saving for a typical family in Jackson Lee's 18th Congressional District would be nearly $1,000. He also said the tax changes could produce 81,000 new jobs in Texas.

Republicans hope to get a final bill through the Senate around Thanksgiving, giving House and Senate negotiators time to hash out differences and get a bill to the president's desk before the end of the year.

But they know they have little room for error.

Democrats, meanwhile, are seeking to exploit potential GOP differences over tax cuts that they say would most likely be financed by deficit spending. House Democratic Leader Nancy Pelosi, making her closing argument against the bill, said, "Oh where, oh where are the deficit hawks?"